Business is nothing but a trust chain. As one of my colleagues has eloquently put it, “A customer
buys; it is an expression of trust. You
hire someone; it is an expression of trust.

An investor invests; it is an expressionof trust. Trust itself is the sum total ofseveral such entrustments.” Anybreak in the chain can have majorconsequences for all parties; itis therefore in the interest of allparties to ensure that the trustchain is never broken. (I have usedthe word “business,” but the trustchain is a principle that shouldapply in and to all organisations.)

The fundamentals

An audit is a systematic and independent
examination of books, accounts, statutory
records, documents, and vouchers of an
organization to ascertain how far the
financial statements as well as non-financial
disclosures present a true and fair view of
the concern. It follows that it is essentially
an inspection, not an investigation.

It follows from the above that, whilst
an audit may well provide an effective
mechanism for identifying real—or
apparent—anomalies, inconsistencies,
and irregularities, it does not necessarily
identify root causes. There may be an
apparent correlation between any anomalies,
inconsistencies, and irregularities, but
correlation does not equate to causality. The
identification of the root causes of these
aberrations requires forensic investigation.

An audit, conducted by an independent
organisation, should quickly reveal any
apparent failures by an organisation. It will
not in all probability identify the underlying
causes or reasons. Apparent failures should
not result in automatic condemnation; any
organisation that is subject to an audit must be
given adequate opportunity, before the audit
report is finalised, to respond to the audit
findings. This “apply or explain” approach is

Non-financial audit in acorporate governance context» Business is nothing but a trust chain.» Non‑financial audits are central to effective compliance and corporate governance.» Non‑financial audits, like statutory financial audits, must be conducted honestly, objectively, and with integrity.» Good planning, preparation, and monitoring are crucial to successful non‑financial audits.» Non‑financial audits should be integral to the processes and systems that underpin effective compliance andcorporate governance.Purse